Services within the scope of exception in export;
1- The service in Turkey should be given for a customer living in a foreign country (the invoice should be issued on behalf of the customer living in a foreign country in order to certify that transaction).
2- It is compulsory to take advantage of the service abroad.
In accordance with the provisions of VATA and General Communiqué on VAT system application, services provided for customers living in a foreign country should be declared within the scope of exception in export before the amount is brought to Turkey as a foreign exchange, during the period when services are offered.

Nonetheless, if a person demands the return of the payment of taxes imposed concerning to abovementioned transactions and being not subject to discount, he/she should provide proof of payment ( a document which certify that the foreign exchange is brought to Turkey, bank receipt etc.).

Source: Value Added Tax Act

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

2- WHAT IS THE LEGAL FOUNDATION OF THIS?
First of all, a fully responsible company should pay taxes in Turkey for the earning that it makes throughout the World.

In accordance with article 3 of the Corporate Tax Law; “Companies (listed in article 1 of the law) whose legal center or business center is in Turkey should pay taxes either they make profit in Turkey or in a foreign country.

HOWEVER, in sub clause (h) of the first clause of article 5 titled “Exceptions” of the law, there is a provision that the earnings provided by construction, repair and fitter’s work done in a foreign country and then transferred to the general nominal accounts in Turkey are not subject to Corporation tax.

In the portion titled “5.9 Exception in profits made through construction, repair, fitting works and technical services done in a foreign country” of Communiqué on Corporation Tax;
“in sub clause (h) of the first clause of article 5 titled “Exceptions” of the law, there is a provision that the earnings provided by construction, repair and fitter’s work done in a foreign country and then submitted to the general nominal accounts in Turkey are not subject to Corporation tax.”

3- BESIDES, YOU DO NOT HAVE TO BRING YOUR PROFIT INTO TURKEY!
In order to practice this exception, you do not have to bring your profit into Turkey if you make money through;
-Construction,
–Repair,
–Fitting works and
-Technical services.

It is enough to transfer abovementioned profits to the general nominal accounts in Turkey in order to take advantage of the exception.

You do not have to bring these amounts into Turkey and you may use them abroad. Additionally, you have to include this amount into profit and loss statement amount of your company accounts in Turkey.

4- YOU SHOULD INCLUDE THIS AMOUNT IN YOUR INCOME STATEMENT (PROFIT-LOSS STATEMENT) AS PROFIT.
The profit made within the scope of the exception should be included in company’s income statement (profit-loss statement), and then it should be deducted from the tax assessment while making corporate tax return.

Thus, finance and credit rating institutions will evaluate your company’s credibility, foreign-based profit will affect your conditions positively.

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.